Unlike D&B, Cortera does not offer a specific "supplier risk score" that is distinct from the other aspects of its offering. Rather, it relies on a slightly unorthodox hybrid approach to gather both structured (e.g., credit) and unstructured (e.g., local news sources) data to arrive at one of six potential rankings for suppliers (and buyers) as well as an actual risk score. Cortera told Spend Matters that historic approaches to gathering vendor information to arrive at a risk score generally rely on looking at accounts receivable information that show whether buying organizations pay their bills on time. Their approach combines this model with a continuous search of 10,000+ different sites, wires and news sources to take advantage of potential information contained in unstructured content. For example, a local news source might have information where a sentiment analysis can be derived (e.g., whether a company is closing a plant/facility or creating new jobs can lead to a negative or positive score impact). In addition, Cortera, like other enrichment providers, searches public records such as suits, leans, bankruptcy data, etc.
The end result is a score (risk classification) on a supplier that can then allow the pulling of a full report if necessary. Cortera provides a score between 0-900 on suppliers (similar to a FICO rating scale) where higher scores mean lower risk. Within SAP, these risk classifications are available directly in the spend analysis system. Cortera breaks its risk segmentation into six different possible categories:
- Higher Risk, Trending Down
- Higher Risk, Trending Up
- Consistently Higher Risk
- Lower Risk, Trending Down
- Lower Risk, Trending Up
- Consistently Lower Risk
Other specific Cotera information that users can display within SAP includes the number of recent bankruptcy filings, the number of recent tax liens or judgment filings and the number of legal news stories. In addition, Cortera can "include a variety of payment experience details like 3-month average DBT, 3-month average balance, % past due and others."
From a pricing standpoint, Cortera shared with Spend Matters that they are expecting SAP customers "to purchase our supplier risk information based on an annual commitment. On a monthly basis customers will be able to refresh their entire supplier portfolio for pennies per record to access a core set of elements (risk segment, number of news stories, number of tax liens or judgment filings etc...)." Moreover, "If a Spend Performance Management customer wishes to access more information they can pull a Cortera Supplier Risk Report for more details about a particular supplier for $5.00 per report or less (we offer discounts when bundled with other products)."
What is Cortera trend data suggesting? Here's how the majority of suppliers that Cortera tracks currently rate for the current month:
- 7.73% of all businesses are in the 'Higher Risk, Trending Down' segment
- 48.55% of all businesses are in the 'Consistently Lower Risk' segment
- 24.94% of all businesses are in the 'Consistently Higher Risk' segment
Stay tuned as we conclude this series with interviews featuring Cortera's Jim Swift and SAP's Thad Dungan highlighting how they expect customers to use supplier risk enrichment data in practice as well as how SAP views content and third-party intelligence going forward.